City strikes new cost-sharing agreement with the developer of the Silver Hills Drive extension
The city’s finance committee agreed Tuesday to amend its cost sharing agreement with the developer of the Silver Hills Drive extension – a major residential subdivision that would create 700 new homes in Sudbury.
The project, which was first approved in 2016, has increased its estimated total costs from the $6.7 million originally approved to $10.5 million with recent design updates brought forward by developer 1232252 Ontario Inc.
“The proponents have done further design work since 2016, and presented the city with a refined estimate that we reviewed and are satisfied that it represents an appropriate cost for this project,” said city planning service director Kris Longston.
The cost of the project will be split three ways between the developer, the city, and the development charges the project is expected to generate. The amendment sees the city’s share of the cost rise from $1.6 million to $2.5 million, while the developer will cover $2.8 million, and the development charges will account for $5.3 million.
The amendment recommended the introduction of upset limits and a sunset clause that puts a three-year deadline on the project’s development, while also shifting construction responsibility away from the city.
The city’s $2.5 million share of the project will be included in the 2023 and 2024 Capital Budget.
The project itself proposes an extension of Silver Hills Drive to Bancroft Drive. The extension, a future collector road, will feature a roundabout and will facilitate the development of a 700-unit residential subdivision. The development charges expected to cover part of project’s estimated cost will primarily be levied on those future units.
Coun. Robert Kirwan questioned where the money would come from the cover the $5.3 million while the city waited for the development charges to be processed. “How long would it take to pay for this portion over the years? My understanding is that development charges take a long time to collect.”
“That’s a difficult question,” said accounting manager Jim Lister. “It does require an estimate of the rate of development on a go-forward basis. But the councillor is right; it will take a period of time.”
Lister added that in this case, the process is essentially reversed. Where typically the city would fund the project then collect the development charges later, in this case, the city will not cover the full cost of the project, and will instead allocate the funding from future development charges in the capital budget.
“The city will only budget the $2.5 million and potentially create a small requirement to fund future (development charges) to cover the amount related to this project,” said Lister.
He clarified that the city would use its reserves to fund the development charges, then would recoup those reserves when the charges came through later.
Also at issue were outstanding property acquisitions. While much of the property required for the development has already been acquired, more funding will be required going forward to cover further acquisition costs that arise.
According to Longston, city staff expects that the agreement will have clauses that account for issues related to property acquisitions beyond either party’s control. Those clauses would prevent potential challenges that may arise from the newly added sunset clause, which sets a time limit of three years on project development to prevent indefinite commitment from the city.
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